1Preliminary due diligence for amending the articles

The articles of a corporation can be amended for various reasons such as to change the name or amend the share structure of an existing corporation. For instance, a corporation may want to increase the number and type of classes of shares available, or change the attributes of previously authorized and/or issued shares, or change the number of directors (either at a fixed number or minimum and maximum number) for the corporation.

It is important to review the existing articles of incorporation (as may be amended) of the subject corporation and to confirm with the client the current directors, officers and shareholders of the subject corporation and you may wish to conduct an independent review of the minute book in this regard.

It is important to speak to the client’s tax advisors when changing the share structure of a corporation to consider any tax implications with the proposed structure (especially in the case of amendments to the attributes of any previously authorized and/or issued shares).

It is important to determine the existence of any shareholder agreements or any other agreements which may provide relevant approval provisions.

Legislative authority to amend the corporation's articles:

Subsection 168(1) of the OBCA permits a corporation to amend its articles from time to time as follows:

change its name;

Repealed: 1994, c. 27, s. 71 (20).

add, change or remove any restriction upon the business or businesses that the corporation may carry on or upon the powers that the corporation may exercise;

add, change or remove any maximum number of shares that the corporation is authorized to issue or any maximum consideration for which any shares of the corporation are authorized to be issued;

create new classes of shares;

Repealed: 1994, c. 27, s. 71 (20).

change the designation of all or any of its shares, and add, change or remove any rights, privileges, restrictions and conditions, including rights to accrued dividends, in respect of all or any of its shares, whether issued or unissued;

change the shares of any class or series, whether issued or unissued, into a different number of shares of the same class or series or into the same or a different number of shares of other classes or series;

divide a class of shares, whether issued or unissued, into series and fix the number of shares in each series and the rights, privileges, restrictions and conditions thereof;

authorize the directors to divide any class of unissued shares into series and fix the number of shares in each series and the rights, privileges, restrictions and conditions thereof;

authorize the directors to change the rights, privileges, restrictions and conditions attached to unissued shares of any series;

revoke, diminish or enlarge any authority conferred under clauses (j) and (k);

subject to sections 120 and 125, increase or decrease the number, or minimum or maximum number, of directors; and

2Determine what authorizations are required

Depending on the nature of the amendment, it will require either a special resolution of the shareholders or a resolution of the directors (see ss. 168(5)).

All amendments under ss. 168(1) are required to be authorized by special resolution.

Amendments under ss. 168(2) or 168(4) may be authorized by resolution of the directors.

Where the directors are authorized by the articles to divide any class of unissued shares into series and determine the designation, rights, privileges and restrictions and conditions thereof, they may authorize the amendment of the articles to so provide (OBCA, s. 168(2)).

Despite subsection 168(1), where a corporation has a number name, the directors may amend its articles to change that name to a name that is not a number (OBCA, s. 168(4)).

ss. 170 should also be considered where holders of a class or series are entitled to vote separately as a class or series for certain amendments contained in s.170(1).

A registered holder of shares entitled to vote, or a beneficial owner of shares that are entitled to be voted, at an annual meeting of shareholders may, in accordance with ss. 99 of the OBCA, make a proposal to amend the articles (OBCA, ss. 169(1)).

Special resolution of shareholders authorizing articles of amendment (see the sample document in the Resources section of this How-To Brief).

3Amend the articles to effect a name change

If seeking to change the name of the corporation, you must complete the following:

Obtain an Ontario-biased name search report NUANS (Newly Upgraded Automated Name Search) which is valid for 90 days. The NUANS report may be further renewed for subsequent 90 day periods if necessary or desired, prior to its expiry date.

The name search provides a list of all corporate names, business names and registered or pending trademarks that have already been incorporated or registered and are similar to the proposed name.

The NUANS name report must be submitted with the amendment application. The name search will determine whether the name is currently in use or if the name is subject to restriction.

If you are changing your name from English to French or French to English, you need to perform a name search for each of these searches in each respective language.

If you want a numbered name, e.g., 8011782 Ontario Inc., you do not require a name search.

No corporation shall change its name if, (a) the corporation is unable to pay its liabilities as they come due; or (b) the realizable value of the corporation's assets is less than the aggregate of its liabilities (OBCA ss.171(3)).

In this regard, it is a recommended due diligence practice to prepare a solvency certificate signed by an officer of the corporation attached to the special resolution/directors authorizing the amendment to change the name.

Resolution of shareholders for change of name (see the sample document in the Resources section of this How-To Brief)

New specimen share certificates for each class of shares in the new name should be adopted (see the sample resolution of the directors and share certificate in the Resources section of this How-To Brief).

4File the forms

The articles of amendment must be completed in duplicate on Form 3. (See the link to Form 3 in the Resources section of this How-To Brief.)

The articles of amendment must bear the original signatures of an officer or director of the corporation.

An original Ontario-biased NUANS name search report must be included if requesting a name change.

Include a cover letter providing a contact name, return address and telephone number.

Include the filing fee (currently $150) payable to the Minister of Finance.

The Ministry permits advance filing of up to 1 month for a future date.

5 Consider the time frame for return of the articles of amendment

Over-the-counter service for articles of amendment at the Companies and Personal Property Securities Branch of the Ministry of Government Services (MGS) is immediate. The Ministry's hours are Monday to Friday 8:30-4:00. For mailing or drop off service, allow two (2) to four (4) weeks for return of the articles.

Electronic filing is currently not available.

6Special Considerations

It is prudent to send a formal and detailed reporting letter to the client (and its accountant) with a copy of the filed articles of amendment, which details the particulars of the amendment.

In the case of a name change, a copy of the filed articles of amendment should be provided to the corporation's bankers and other desired third parties doing business with the corporation to update their records/accounts in new corporate name.

The corporation will typically have a contractual obligation to provide formal notice to secured creditors of such name change.

If the corporation has any agreements, licenses, registered trade-marks, registered copyrights, issued patents, real estate, PPSA registrations, etc. (either in Canada or in foreign juriscitions) these will need to be updated in the applicable registration office in the applicable jurisdiction to reflect the proper new name of the corporation.